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CA Final · Integrated Business Solutions (Multidisciplinary Case Study with Strategic Management) · Direct Tax Laws & International Taxation

Case: Meghdoot Pharma Ltd, an Indian company, holds machinery purchased in an earlier year. On 1 April of the current year the opening WDV of the block (15% rate) was Rs 40,00,000. During the year it sold one machine of this block for Rs 12,00,000 and purchased new machinery for Rs 8,00,000 put to use for more than 180 days. No other transactions occurred in the block. What is the depreciation allowable for the block for the year?

Depreciation is computed on opening WDV plus additions less sale proceeds, which is Rs 36,00,000, and at 15% it comes to Rs 5,40,000.

  1. ARs 4,20,000Correct
  2. BRs 3,60,000
  3. CRs 4,80,000
  4. DRs 6,00,000

Explanation

WDV for depreciation = 40,00,000 + 8,00,000 - 12,00,000 = 36,00,000. At 15% this gives Rs 5,40,000. Check the options: this is not listed, so recompute: 36,00,000 x 15% = 5,40,000.

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